“Ultimately, his political standing is judged by the health and well-being of the economy,” said Josh Holmes, a political adviser to Senator Mitch McConnell of Kentucky, the Republican leader. “What he’s talking about from a tax perspective is administration-assisted suicide.”
Today in Business
May 6, 2021, 8:28 a.m. ET
But Mr. Holmes agreed that, at least in the short term, Mr. Biden was making a winning political calculation. “He’s right that corporate tax increases are not unpopular,” Mr. Holmes said. But the political calculus for Republicans is that the policies themselves will prove unpopular with American voters by the midterm elections because of their effect on workers and the economy, he said.
Independent forecasters largely expect the economy to boom this year as the country reopens widely for economic activity on the strength of Covid-19 vaccinations. Analyses vary on how Mr. Biden’s $4 trillion agenda could affect that. Analysts at the Penn Wharton Budget Model predict the tax increases would hurt growth, on balance. Wells Fargo forecasters wrote this week that Mr. Biden’s infrastructure package, including the corporate tax increases that would fund it, would increase growth in the coming years.
The fight in Washington over Mr. Biden’s plans is a continuation of a battle that began under President Donald J. Trump, who signed a $1.5 trillion tax cut package into law in 2017. Democrats successfully portrayed the cuts as benefiting the rich, and they never reached the kind of public popularity that Republican leaders envisioned. Republicans largely abandoned plans to focus on the tax cuts during the 2018 midterm election campaigns.
“There were far more Democratic ads about it than there were Republican ads,” said Geoff Garin, a Democratic pollster.
In many ways, those tax cuts have given Mr. Biden an opportunity, Mr. Garin said.
“When Biden talks about the corporate tax rate, he frames it in the context of rolling back the 2017 corporate tax cut as opposed to an out-of-the-blue increase on corporations,” he said. “It’s clear from polling that when you provide the context of the 2017 corporate tax cut, which most voters feel was excessive and wasteful, support for the Biden proposal goes even higher.”
White House officials also cite the 2017 law in explaining their aggressive stance on the tax issue. “The pandemic laid bare huge inequalities in this country,” said Anita Dunn, a senior White House adviser. “Even before, the 2017 tax cut was very unpopular.”